| Instability threatens central America's attractiveness | ||||||
Times have changed since central America had an unenviable reputation for civil wars and death squads rather than its credit ratings. Twenty years on from the bad times of the 1980s, economic integration, stability and growth characterize the region. Central America is rapidly becoming a safe haven for bondholders in Latin America.
Larger Latin American bond markets look set for a volatile year, but investors are still hungry for higher yields. So central America might have its best year yet, as debt from the small economies of El Salvador, Costa Rica, Panama and Guatemala catches the eye of the market.
"There is so much instability in Latin America today that central America has come out on top. It has become a much improved investment in the past few years," says Alice Faibishenko, analyst at Deutsche Bank in New York.
Panama, El Salvador and Guatemala, whose small economies are dominated by tourism, textile exports, coffee, bananas, and shipping, plan to issue dollar-denominated sovereign debt on international markets this year, with Costa Rica already setting the pace.